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EMERGING MARKETS-Brazil's real near one-month high on rebound hopes, LatAm stocks fall

Sagarika Jaisinghani
·3 min read

* Economic data points at stable recovery in Brazil * Brazil government presents public sector reform bill * Sharp declines on Wall St hit global equities * Mexican peso firms as labor market recovers * LatAm currencies to pick up in near term -poll By Sagarika Jaisinghani Sept 3 (Reuters) - Brazil's real firmed to a near one-month high on Thursday as a clutch of data raised hopes of a steady post-pandemic economic rebound, while Latin American stocks tracked declines on Wall Street as investors dumped high-flying tech stocks. The real firmed 0.4% to the dollar, gaining for a third straight session as data showed industrial output rose 8% in July at a much stronger pace than economists had expected. The figures are the latest in a series of macroeconomic indicators to suggest a pickup in business activity in Latin America's biggest economy. Central bank chief Roberto Campos Neto said on Wednesday the economy was on course to grow by 4% or more in 2021. "Overall, it looks like Brazil's economy is enjoying a strong third quarter," said William Jackson, chief emerging markets economist at Capital Economics. "However, with fiscal tightening likely next year, we expect the pace of recovery to slow sharply." Brazil's government on Thursday presented to Congress a constitutional reform bill aimed at simplifying and reducing the cost of its public sector, which would make it easier to fire civil servants and cut certain benefits, and gives the president sweeping powers to eliminate public sector jobs and bodies. Brazil's stock index fell 0.9%, with miner Vale SA sliding 3.3% as Federal prosecutors in Brazil's Minas Gerais state sought a court order to replace the company's executives who are accused of disregarding safety methods in the aftermath of two deadly mining disasters. A broader index of regional equities slipped for a second straight day as a 2.5% slide in the U.S. benchmark S&P 500 knocked global investor sentiment. The tech-heavy Nasdaq tumbled as much as 5% as traders sold market-leading stocks including Apple Inc. Bourses in Mexico, Argentina and Colombia shed more than 1%, while the Chilean stock index outperformed with a 0.3% decline. Among currencies, the Mexican peso firmed 0.4% to the dollar as data showed nearly 1.5 million more Mexicans were economically active in the labor market in July compared with June. Latin American currencies will pick up somewhat in the near term as investors watch the U.S. presidential election campaign for any hints about Washington's future approach toward the region, a Reuters poll showed. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1108.87 -0.9 MSCI LatAm 2007.41 -0.11 Brazil Bovespa 100967.92 -0.93 Mexico IPC 36509.04 -1.47 Chile SPIPSA 3804.11 -0.28 Argentina MerVal 44474.85 -0.897 Colombia Colcap 1237.79 -1.62 Currencies Latest Daily % change Brazil real 5.3072 0.91 Mexico peso 21.6400 0.32 Chile peso 772.8 -0.26 Colombia peso 3663.04 -0.19 Peru sol 3.5397 -0.14 Argentina peso (interbank) 74.3700 -0.07 (Reporting by Sagarika Jaisinghani in Bengaluru Editing by Chris Reese)